North Penn School District
! Budget Update
2015-2016 Preliminary
February 5, 2015
!
!
Tonight’s Agenda
• Preliminary budget review
• Expenditure highlights
• Revenue highlights
• Tax impact
Budget Challenges
• Act 1 tax limitations • PSERS increase
• Charter schools
• Technology capital purchases
• Textbook adoption
• Flat state subsidy
Budget Summary
• $237.9 M budget
• $10.9 M increase over 14-15
• 4.8% increase over 14-15
• Budget deficit of $6.7 M after Act 1 base
increase (1.9%)
Budget Comparison
Fiscal Year
Budget
Revenues
Expenses
Surplus
(Deficit)
2015-2016
$231,233,115
$237,992,464
-$6,759,349
2014-2015
$223,077,924
$227,035,981
-$3,958,057
$ Change
$8,155,191
$10,956,483
-$2,801,292
% Change
3.7%
4.8%
70.8%
Expenditure Increase Factors
Salaries
$3,172,186
PSERS
$6,500,382
Technology capital lease
$1,159,508
New debt for Hatfield project
$214,985
Textbook adoptions
$2,000,000
Bus lease
$95,273
Total increase in major items
$13,142,334
Act 1 index revenue @1.9%
$3,057,885
District Allocation by Function
1%
7%
28%
64%
Instruction
Support Services
Non-Instructional Support
Other Expenditures and Financing
Allocation by Object
2%
1%
3%
5%
6%
2%
4%
50%
27%
Salaries
Benefits
Purchased Professional Services
Purchased Property Services
Other Purchased Services
Supplies
Equipment
Other Objects (Debt Interest)
Transfers & Debt Principal
Act I Index
5%
4.4%
4.1%
3.9%
3.75%
3.4%
2.9%
2.5%
2.1%
1.7%
1.7%
1.9%
1.4%
1.25%
0%
06-07
07-08
08-09
09-10
10-11
11-12
12-13
13-14
14-15
15-16
Act 1 Exceptions
• Retirement
• Special education
• Electoral debt
• Grandfathered debt
Act 1 Exceptions
• Retirement = $1,797,729
• Special ed = $662,239
• 3.43% total tax increase with exceptions
Retirement Rate
Year
Employer Rate
Gross $
% Rate Inc.
2010-11
5.64%
$6,117,388
Base
$9,142,160
53%
58,518,276
2011-12
8.65%
2012-13
12.36%
$12,608,373
43%
2013-14
16.93%
$18,817,162
37%
2014-15
21.40%
$24,247,445
26%
2015-16
25.84%
$30,621,078
20%
Retirement Rate
40%
32%
24%
16%
8%
0%
08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20
Employer Rate
14%
Retirement as a % of Budget
11%
8%
6%
3%
0%
10-11
11-12
12-13
13-14
Retirement % of Budget
14-15
15-16
Fund Balance
• Cumulative excess of revenues over
expenses
• Help mitigate future tax increases
• Maximum of 8% in unassigned balance
Fund Balance Breakdown 6/30/14
Description
Amount
Nonspendable (inventory & prepaid items)
$204,370
Committed to PSERS
$14,406,187
Assigned for self-funded insurance
$5,700,000*
Unassigned
$17,755,761
Total Fund Balances
$38,066,318
$18,000,000
Unassigned Fund Balance
History
$14,400,000
$10,800,000
$7,200,000
$3,600,000
$0
08-09
09-10
10-11
11-12
12-13
Ending Fund Balance
13-14
14-15
Revenue Allocation
1%
17%
Local
82%
State
Federal
Local Revenue Allocation
1%
1%
8%
2%
Real estate/interims
EIT
Transfer tax
Delinquent tax
Other
88%
Real Estate Taxes
• Based on January assessment totals
• Based on millage of 23.6224 mills (1.9% inc.)
• Assumes 97.0% collection rate
• Represents 72% of all revenues
Signs of Economic Rebound
• Real estate assessments
• Continued reverse appeals
• Fewer taxpayer appeals
• Earned income tax
• Realty transfer tax
Earned Income Tax
$15,000,000
$15,327,539
$15,000,000
$14,489,809
$13,900,000
$13,750,000
$13,029,723
$12,987,036
$12,788,785
$12,873,137
$12,912,015
2011
2012
$12,500,000
$11,250,000
$10,000,000
2008
2009
2010
2013
2014
2015 (Budget) 2016 (Budget)
The chart shows the total earned income tax for each year. The district
experienced negative growth during the recession. Measure of fiscal health and
an indicator of economic conditions
Tax Base History
$7,200,000,000
$7,120,000,000
$7,040,000,000
$6,960,000,000
$6,880,000,000
$6,800,000,000
08-09
09-10
10-11
11-12
12-13
Assessed value
13-14
14-15
15-16
State Revenue Allocation
4%
10%
20%
14%
34%
11%
7%
Basic Ed
Special Ed
Transportation
Property Tax Reduction
Retirement
Social Security
Other
State Sources of Revenue
• Assuming no increase in basic or special
education subsidy for now……
• Wolf budget address 3/4
Retirement Subsidy
• Largest state subsidy - $15.3 M
• 50% of district retirement expense
• $3.2 M increase
Millage Review - Montco
14-15 millage starting point
23.1819
Maximum millage increase with no exceptions using
Act 1 index of 1.9%
0.4405
15-16 maximum millage using Act 1 index but no
exceptions
23.6224
Additional revenue generated using Act 1 index
$3,057,885
Tax Scenario
Average
Homestead
Assessment
Average
Homestead
Change
Tax
Increase
County
Budget
Deficit
1.9%
Montgomery
$6,759,349
$153,543
$68
1.9%
Bucks
$6,759,349
$22,936
$55
Recommendation
•
1.90% tax increase
!
•
Reduce deficit through new information,
refined data and assumptions, and use of fund
balance
!
•
PSERS stabilization fund utilization
•
See handout
!
Drawdown of PSERS
Stabilization Fund
!
• Fund accumulated for 6 years
!
• Caution necessary since it uses
one-time money for ongoing
expense
Next Steps
• Continued review of revenues and expenses
• Refinement of current year estimates
• Refine and update data based on new information
• State and Federal allocations
Budget Timeline
2/5
Finance committee meeting review of preliminary
budget (rescheduled from 1/26)
2/10
Preliminary budget adoption
Board work session
5/12
Proposed final budget
adoption
Board work session
6/18
Final budget adoption